Two people have been killed: the gunman, Man Haron Monis, and one of the hostages. Monis is reported to have killed the hostage.

Police threw stun grenades and fired a volley of shells into the building before forcing their way inside. More gunshots followed shortly afterwards. Television footage showed the cafe, which had been in darkness since just after sunset, being lit up inside by gunfire.

NSW Police posted this update on Twitter confirming an end to the siege:

Just before police went in, a man left the building with his hands in the air. Shortly afterwards a group of four hostages ran from the shop with their hands in the air.

Police then stormed the building and minutes later TV footage showed people with injuries being led away by emergency services personnel.

An injured hostage was carried from the building by rescue squad police. Photo: Joosep Martinson/Getty Images

An officer in a blast suit and a bomb disposal robot could be seen outside the cafe.

A number of ambulances were on standby and have converged on the site and paramedics were seen running towards the building from Elizabeth Street. Within minutes ambulances began racing from the scene.

Royal North Shore Hospital later confirmed a woman in her 40s was being treated for serious injuries.

Police have had the building surrounded since around 9.45am AEDT on Monday morning, when an armed man entered the Lindt cafe in the heart of Sydney’s business district and took more than a dozen people hostage.

A black shehadah flag, a general statement of faith in Islam, was hung in the window of the cafe.

The hostage-taker was revealed to be Monis, a self-styled Iranian cleric, who was currently on bail over a number of violent offences. He was given political asylum after coming to Australia as a refugee with his family in 1996, and was convicted for sending hate mail to the families of dead Australian soldiers last year.

Monis had been demanding three things: he wanted to talk to Prime Minister Tony Abbott, he had asked for an Islamic State flag to be delivered, and he had also said he wanted media to broadcast that Australia was under attack by the Islamic state.

The siege put a large area of the Sydney CBD into lockdown for the day, with offices being evacuated for several blocks around the siege location at Martin Place.